Posted: Fri Oct 21, 2005 5:49 am Post subject: DOING BUSINESS IN NEW ZEALAND
DOING BUSINESS IN NEW ZEALAND
Starting up business
This chapter discusses types of business activities permitted in New Zealand and looks at the issues surrounding the main corporate structure options for overseas companies starting up business in this country.
Type of business
Restrictions
Very few restrictions are imposed on foreign companies on the type of business operations permitted in New Zealand. For the most part, decisions on industry sectors and the nature of goods and services are left to the discretion of the company and its evaluation of appropriateness for the New Zealand market. Exceptions are for activities that may involve natural resources, such as commercial fishing or rural farming.
Incentives
Foreign companies investing in New Zealand in tourism or in sectors that contribute to foreign exchange earnings (such as exporting locally manufactured goods) are particularly welcomed by the New Zealand Government. Bodies such as Tourism New Zealand and New Zealand Trade and Enterprise are in place to assist business activities in these areas.
Corporate structure options
There are three main ways for overseas companies to do business in New Zealand :
Registering a branch
An overseas company seeking to register a branch in New Zealand must reserve its name with the Registrar of Companies. The other administrative requirements would be satisfied by filing an application within 10 working days from the start of business in New Zealand.
An application must:
state the names and residential addresses of the directors of the overseas company (at the date of application)
state the address of the overseas company’s main place of business in New Zealand
attach evidence of incorporation of the overseas company and a copy of the instrument constituting or defining its constitution (in English)
state the name and address of at least one person in New Zealand who is authorised to accept service of documents on the company’s behalf.
Forming and registering a subsidiary company
A subsidiary company incorporated in New Zealand must have at least one shareholder and one director (who may be the same person). Non-resident shareholders and directors are permitted. Generally, any legal entity may be a shareholder, but only people may be appointed directors. There is no statutory requirement to appoint a company secretary.
There is no restriction on the size of a company’s share capital. Companies are not permitted to have a par or nominal value attached to their shares. Instead, company directors are required to determine the consideration for the issue of shares, and to resolve that the consideration and terms of issue are fair (in their opinion). It is not necessary for the issue price to be fully paid.
As in the case of a branch, the first step to register a subsidiary is to apply to reserve the proposed subsidiary’s name. Once the name of the proposed subsidiary company has been approved and reserved with the Registrar, the following incorporation documents must be filed:
consent to act as director and a certificate that he or she is not disqualified from acting (for each director)
consent of shareholder (for each shareholder)
a copy of the constitution, if the company is to have one.
Applications to the Registrar of Companies must also include:
the name and residential address of each director
similar details of the proposed shareholders
details of the registered office, and address for service of documents, which must both be in New Zealand.
Branch or subsidiary?
The decision of whether to establish a branch office or a subsidiary company will be influenced by legal, tax and commercial considerations. The following issues may be relevant:
Annual accounts
A New Zealand branch of an overseas company must file two separate sets of audited financial statements, one for its worldwide operations and one for its New Zealand business. A subsidiary is required to file audited financial statements relating to its New Zealand business only. Every company must file an annual return at the Companies Office.
Filing of documents
It is necessary to notify the Registrar of any changes to incorporation or branch documents within stipulated time frames which can be as short as 10 working days. In the case of large companies registered as a branch, this requirement may prove cumbersome. In comparison, changes to a subsidiary’s incorporation documents may occur less often.
Liability
While an overseas company would be liable for damages resulting from the activities of its branch in New Zealand, it would not normally be directly liable for activities of its subsidiary in New Zealand. However, establishing a special purpose overseas company as the branch may help ring-fence liability for the activities of the branch.
Tax
A New Zealand branch of an overseas company will generally be considered as non-resident for taxation purposes. If an overseas company incorporates a subsidiary in New Zealand, that subsidiary is a New Zealand tax resident.
Please refer to the Taxation chapter (p. 22) for more information on the New Zealand tax environment.
Fees
The filing fees for establishing a subsidiary or a branch electronically are approximately NZ$60 as at May 2005 in each case.
Merger or take-over proposal
If a company decides to carry on its business by merging with or buying a New Zealand company, it must consider the applicability of the Commerce Act 1986. Please refer to the Regulations Affecting Business chapter (p. 32) for an outline of the key restrictions governing business acquisitions.
If the New Zealand company is listed on the New Zealand Stock Exchange or, if not listed, has more than 50 shareholders, the Takeovers Code is likely to apply. Specific advice on the implications of the Code applying should be sought.
Useful Links
Buying from New Zealand
Is your company interested in importing goods and services from New Zealand?
www.MarketNewZealand.com is the New Zealand Trade and Enterprise official website for exporters and importers.
Trade enquiries on MarketNewZealand.com
Sending a trade enquiry is the fast way to get results. First register as a potential buyer on MarketNewZealand.com. We immediately forward all trade enquiries to New Zealand companies who have the capability to provide quality products.
Search for New Zealand products and services on MarketNewZealand.com
To explore New Zealand's capability, search our database for products and services. We list over 2,500 companies and thousands of products and services.
Industry information on MarketNewZealand.com
Up-to-date information about the New Zealand market, related to the main industry sectors in New Zealand.
For direct assistance, contact New Zealand Trade and Enterprise
Exporting to New Zealand
Business and entrepreneurs based outside New Zealand who wish to export products or services to New Zealand are advised to seek advice from the trade promotion agency in their own country. For information on potential buyers or regulations, contact the following agencies:
Contact potential buyers
New Zealand Chambers of Commerce
www.nzchambers.co.nz
Search the directory for businesses throughout New Zealand.
Customs regulations
New Zealand Customs
www.customs.govt.nz
Find out the rules and requirements for goods arriving in New Zealand.
Exporting animal or plant products?
Ministry of Agriculture and Forestry Quarantine Service
www.maf.govt.nz/quarantine/
Important information for anyone exporting animals or animal products, live plants or plant products, food, or vehicles to New Zealand.
Investing in New Zealand
Investment in New Zealand businesses
Investment New Zealand website
www.investnewzealand.com
InvestNewZealand.com connects international investors with investment opportunities in New Zealand. Visit this site if you are interested in relocating your company in New Zealand or establishing a partnership or joint venture.
Move to New Zealand to invest
Immigration New Zealand Invest site
www.immigration.govt.nz/Migrant/Stream/Invest/
How to move here to invest, establish a business, or relocate your business here.
Industry information on MarketNewZealand.com
Up-to-date information about the New Zealand market, related to the main industry sectors in New Zealand.
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